Sarawak: A State of Opportunity

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The development of economic corridors has enabled strategic locations like the state of Sarawak to galvanise their agricultural sectors. It has provided them with a framework to generate greater output from their natural resources while simultaneously strengthening trade and connectivity, as well as stimulating economic growth.

The rise of agrocorridors

Well-grounded economic corridor programmes are able to provide a framework for the public and private sector to generate important gains for and impacts on a nation or region’s economic growth, trade and connectivity. These programmes have helped to enhance the physical connectivity and functioning of markets locally, regionally and globally. They have also contributed extensively to the generation of economies of scale by integrating public and private investment in transport and agricultural infrastructure, in addition to boosting policy and regulatory framework formation, strengthening institutions and helping to build greater capacity. Indeed, in certain cases, corridor programmes have become the cornerstone of both national and regional economies.

The development of corridor programmes is becoming an increasingly common means by which to drive agricultural expansion. The World Economic Forum formally endorsed fostering agricultural growth corridors in 2009, the primary objective being to catalyse the sustainable progression and enlargement of the agricultural sector. In particular, this objective has been sought via the development of infrastructure and market linkages. If adequately designed and implemented, agricultural growth corridors, which are also termed agrocorridors, have the potential to give rise to a broad range of positive impacts. These include the contribution of the direct and induced investment arising from these agricultural corridor programmes to gross domestic product (GDP), as well as GDP growth of the wider corridor area, and employment generation (see fig. 1).

A strategic location

In terms of agricultural development potential within Malaysia, the state of Sarawak is situated in a prime location to pursue the successful implementation of an agrocorridor. The administrative divisions of Sri Aman, Betong and Sarikei provide the fundamental pillars including arable land, suitable climatic conditions, multimodal transport infrastructure leveraged by access to the sea, a stable institutional framework and sound human resources.

In addition, the state is considered to be one the education hubs of Malaysia, hosting both public and private higher education institutions. Accordingly, there is significant potential to tailor curricula towards the various capacities required to sustain an agrocorridor development in the region, while also enhancing relevant research and growth in this field. This may, for example, include increasing the number of courses related to agricultural science, horticulture, business management, international agriculture and integrated pest management.

Moreover, Sarawak’s economy has performed steadily in recent years, with GDP growth averaging approximately 4 per cent year-on-year as since 2013. Additionally, the state achieved a trade balance surplus of approximately MYR54 billion in 2015, revealing already strong demand the state’s products.

Sarawak also offers an abundance of natural resources, including tremendous agricultural potential and two million hectares of farmable land, as of 2014. Beyond that, the state is home to approximately 20,000 megawatts of hydropower capacity, as well as considerable reserves of fuel and minerals including oil, gas, coal, silica sand and kaolin clay.

Sarawak’s robust manufacturing and services sectors, which comprised approximately 60 per cent of the state’s GDP in 2015, have the potential to sustain the downstream segment of the local agriculture supply chain, with a strong focus on processing. This rich matrix of resources and industry provides the state and potential investors with a solid opportunity to build synergies that will help to enhance the overall capacity of Sarawak’s agricultural potential.

Synergetic advantages

A further source of growth with regard to the future development of an agrocorridor in Sarawak is Indonesia’s MP3EI corridor initiative, which was launched by the Indonesian Government in 2011. The MP3EI plan has a range of objectives, although among the primary goals are to improve the efficiency of the country’s agriculture distribution network and strengthen production.

The initiative serves as a reminder of the importance of adequately planning and implementing such programmes, since various observers suggest that the MP3EI programme runs the risk of becoming oversized.

Yet, the successful implementation of the master plan has the potential to provide an economic corridor in Sarawak with a number of synergetic opportunities. For example, a Sarawak agrocorridor could leverage its extra capacity in relation to any production surplus resulting from the increased agricultural output and food production centres planned in the MP3EI programme.

Additionally, Sarawak may be able use both its manufacturing and educational potential to capitalise on the goals set by the MP3EI. In terms of the former, the state could foster the development of agrocorridor-related business clusters that would not only generate greater productivity and economic growth in Sarawak, but would also be strategically positioned to absorb any extra demand from MP3EI activities.

Regarding education, with a targeted communications plan and industry-led course development, alongside Malaysian students interested in agriculture-related studies, Sarawak’s education providers may be able to attract Indonesian students enthused by the corridor development in their own country. These career paths could serve as a means to build the highly qualified human resources necessary to sustain the development the agrocorridor programme in Sarawak, as well as others in the region, capitalise on Indonesia’s need to address their shortage of human capital in this area, and provide a boost to the Sarawak’s status as an education hub.